The Federal Reserve Board announced that it has issued final guidelines that the Reserve Banks will use to “review requests for access to Federal Reserve accounts and payment services.” According to the Board, the final guidelines will go into effect as soon as they are published in the Federal Register.
The new guidelines are intended to establish a transparent and consistent set of factors for Reserve Banks
The Federal Reserve Board recentlyissued what it calls “Final Guidelines Establishing a Transparent, Risk-Based, and Consistent Set of Factors to be Used in Reviewing Access Requests for Federal Reserve Bank Accounts”
According to the bank’s statement, the updated guidelines are nearly identical to those proposed in May 2021 and the supplemental ones proposed in March of this year. These new guidelines will take effect upon publication in the Federal Gazette.
This move could pave the way for fintechs, crypto banks, and special purpose depository institutions (SPDI) Kraken Bank applied for a master account with the Federal Reserve in October 2020In a recent statement from the Fed, Federal Reserve Bank Vice Chairman Lael Brainard is quoted as explaining why the guidelines are necessary.
“The new guidelines provide a consistent and transparent process for evaluating requests for access to Federal Reserve accounts and payment services in support of a secure, comprehensive, and innovative payment system,” Brainard said.
Increased Requests for Access to Accounts
Increased requests for access to accounts (aka master accounts) are being driven by the growing number of financial institutions offering “new types of financial products” and new The increase in the number of financial institutions offering “new types of financial products” or newly established financial institutions is attributed to According to the Federal Reserve, the new guidelines provide that financial institutions that have federal deposit insurance will be subject to a “more reasonable level of examination.”
On the other hand, institutions that are determined to be engaged in operations that are novel in nature or for which an “appropriate supervisory and regulatory framework” has not yet been developed will be subject to a more extensive examination, the statement said.
In June, Custodia Bank (formerly Avanti)sued the Federal ReserveThe company sued the Federal Reserve for alleged “unlawful delay” in its master account application; like Kraken, Custodia applied for a Fed master account in October 2020 and has been waiting 21 months for a response since its application.
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